Swot And Pestle Analysis Of Tesco Business Essay

Executive Summary:

This report outlines the “Introduction of Oyster Cards and Mobile Phones Top Ups Counters at all TESCO Retail outlets in UK”. The SWOT and PESTAL analysis reflects that TESCO has currently the strengths and resources to successfully offer this service to enhance the customer services to the clienteles. This report also envisages the process and implementation of change and its impact on the current structure while moving towards the service enhancement with the facilitation of marketing and change management tools, theories and framework. More emphasis would be on implementation of strategies for successful adaptation of newly introduced service.

Introduction:

Tesco is a well known Britain’s leading food retail group with an existence elsewhere in Europe, Asia and the United States. Tesco runs more than 2,300 supermarkets, hypermarkets, and convenience stores in the UK (where it is the market leader in food retail), Ireland, Central Europe, and Asia. Its operations include convenience and gasoline retailing (Tesco Express), small urban stores (Tesco Metro), hypermarkets (Tesco Extra), and financial services through Tesco Personal Finance. A global leader in online grocery sales, it owns a 35% stake in US grocery chain Safeway's Grocery Works. It is the leading online grocery store and it is now expanding its business with a TV channel and a "retail based education institution”.

The Tesco offers to its customers a wide range of food and non-food items under the single point of sale, non food items range includes clothing, furniture, Home electrical, personal care, computing, cameras and phones etc.

Vision & Values

We talk about Every Little Helps a lot, but it's not just a catchphrase or marketing slogan, it represents everything we stand for. For our people and our customers, it's how we run our businesses from China to Chorley. (www.tesco.com)

Literature Review

My core books will be “Essential Guide to Marketing Planning” by Marian Burk Wood and Kevin Keller‘s “Strategic Brand Management”. Which has been the essential tool for helping me in devising the right approach for my dissertation? Furthermore, I will be using some of Change management books “Making Sense of Change Management” by Esther Cameron and Mike Green and John P Kotter ‘s “Leading Change” Which can be useful in the analysis of change management process and tools for successful interventions. List of some of the resources that I will make use of it is as follows:

HARVARD BUSINESS REVIEW.

JOURNAL OF ORGANIZATINAL CHANGE MANAGEMENT.

THE INTERNATIONAL JOURNAL OF HUMAN RESOURCE MANAGEMENT

ARTICLES OF EMRALD.

WEBSITES CIPD, TIMES 100 AND PERSONNEL TODAY

SWOT and PESTLE Analysis of Tesco

A PEST analysis of the industry will examine the local, national and global influences of political, economic, social and technological factors to understand opportunities and threats well.

INTERNAL STRENGTHS

• Diverse ranges of products

• Open 24 hours a day

• Strong Cash Flow Position

• Increase turnover and trading profits

• Strong Balance Sheet

• Leading Supermarket Chain

• Brand Awareness

• Human resources

• Online Shopping

• Capabilities to turn resources into advantages OPPORTUNITIES

• Develop brand awareness globally

• New Markets

• Market shift to globalization

• Health awareness growth –GM crops

• Innovation & Alliances

• Low cost brand growth

• Diversification

• Non-food – offers untapped new markets with higher margins

EXTERNAL WEAKNESSES

• Perception of low quality –(Tesco value brands)

• Lack of local knowledge of customers and culture

• Foreign brand

THREATS

• New & existing competition

• Volatility in Price of raw materials

• Economic recession

• Market shift to globalization

• Takeover bids

• Far-East low cost brands

• Extremely high competition for customers and resources

External Environment – PESTLE Analysis

All of those (political, economic, social, technical, legal and environmental) factors will to some extent apply to the retail industry in Sweden.

POLITICAL – Following the European Integration and Free Trade Agreements, the market has opened up for British Companies to invest in Eastern Europe. Tesco already has 60 Hypermarket store in Hungary. Lidl is uncompromisingly fighting to maintain its market share with an aggressive pricing strategy.

ECONOMIC - the Retail sector is fairly recession prawn and also very sensitive to changes in interest rates. Since the events of September 11th the world economies have suffered heavily, stocks plummeted and prices are at all time lows. The world economy is however, now on the up post September 11th. Consumers are optimistic and the retail industry is once again booming.

SOCIAL – changes in consumer taste and lifestyle represent both opportunities and threats for the industry. Opportunities in terms of new market and consumers, however, there are added threats in terms of alternative established Swedish national retailers (foreign company bias).

TECHNICAL – Changes in retailing methods as such clothes sales via the Internet is now a common place in retailing. Paperless operation, the management and administration of the company are undertaken on IT systems, which are accessed through secure servers; provide flexibility in the running of the business. As Sweden is at the forefront of technological advancement with national companies like Ericsson, Tesco would enjoy the comprehensive logistic and distribution channels already in place.

LEGAL – National legislation for health and safety both in terms of consumer rights and also in terms of production of own natural renewable resources for making clothes.

ENVIRONMENTAL – The renewable source of resources used in production, namely cotton and wool are environmentally friendly. The threats are in terms of legal consequences for livestock’s in terms of health and safety.

Critical Analysis:

Today's world competition is very strong in every kind of businesses. Every organizations must provide excellent products or services in order to stay in competition, however their competitors also providing the same or comparable products or services. An important way to an organization to get an edge over its competitors is to identify the customer need and extra service to satisfy and delight their customers, which can retain them and also gain new customers and leads to ultimate profits. Therefore, the achievement of customer satisfaction must be a major objective in all organizations.

To achieve customer satisfaction, an organization has to provide high quality products and also provide an excellent customer service. When the service and product that the company provided is good, they can obtain customer loyalty. The customers will go again and again.

The above SWOT and PESTLE analysis shows that the TESCO is fully capable to introduce the Oyster card top ups counters at TESCO retail outlets to facilitate the customers and yield reasonable profit share from the market, where small retailers used to earn from the market. The cost of the entire project could be workout and oyster top up machine could be purchase in bulk at economic price from the suppliers.

While introducing this new service certain structural changes would be under taken by the management and few strategies to adapt to successfully implementing the change process.

This new service will engaged the attention of the huge existing customer base; nevertheless it will also attract the new customer who could be facilitated by this new service as an enormous people travels through rails, tubes and buses to their work places, schools, shopping malls, amusement centers from morning to evening.

Until this report none of the competitor such as ASDA and Sainsbury has given this service to customer, so this service will give a competitive edge to TESCO on its leading competitors.

Change Management:

“Everybody has a game plan until they get hit in the mouth.”

-Mike Tyson

Change management is a structured approach to transitioning individuals, teams, and organizations from a current state to a desired future state. ...

en.wikipedia.org/wiki/Change_management

Change management frameworks

•Lewin

•Bullock & Battern

•John P Kotter

•Beckhard & Harris

•Nadler & Tushman

•McKinsey

•William Bridges

•Senge

•Stacy & Shaw

Approach

Uses

Lewis

Good for analyzing change at the start

Bullock &Batten

Good for simple isolated changes

Kotter

Great approach for large or small changes, does imply a linear approach

Beckhard &Harris

Simple change formula (C=[ABC]>X) for analyzing change at any point in the process

Different approach, start small and grow. Don’t plan everything up front as you cannot control change.

Stacey&Shaw

A new framework promoting the fact that there are no easy solutions. Not very prescriptive.

Aims and Objectives of Change:

Change management is not an end in itself. Nor does the organization really care about how cutting edge the solution happens to be.

The Objective is to see the resultant benefits actually being delivered:

As fast as possible

Completely

Across all the end - users

With an enthusiastic adoption by stakeholders and end - users

Delivering the targeted benefits back to the client who invested all the time and money

In this regard, change management has a real contribution to make.

Change Process/ Methodology:

Following the above change model Tesco strategic management will firstly develop the project team for the initiation of the oyster card project. A team/ project leader will be selected depending upon he required skills and experience. A team leader will create a clear vision about the installation of oyster top up machines at TESCO retails outlets in UK. After creating a comprehensive vision he project team will develop a concrete Project Plan and utilized all the available resources of TESCO including human resource. Will take assistance from the current IT team to link the oyster top up machines through networking and execute the necessary IT support to the newly developed project. Furthermore, work force would be hired and trained for the project and finally a test run would be executed for successful launch. After a launch, an appropriate monitoring will be done to review the short comes of the project and continuous feed back will be taken from the stake holders i-e employees and customers. In this scenario a desired state will be achieved and result could be seen in terms of revenue.

Implementation of Strategies in Change Management process:

For the successful implementation of Oyster cards top up machines at TESCO retail outlets, two following strategies would be used for the analysis of the existing driving forces and restraining forces and an analysis of stakeholders to identify the readiness of stakeholders for the change.

Lewin (1947, 1951) – Force Field Analysis

Force field analysis (Lewin, 1951) is a diagnostic technique which has been applied to ways of looking at the variables involved in determining whether organisational change will occur.

It is based on the concept of ‘forces’, a term which refers to the perceptions of people in the organisation about a particular factor and its influence.

Driving forces are those forces affecting a situation and which are attempting to push it in particular direction. These forces tend to initiate change or keep it going.

Restraining forces are forces acting to restrain or decrease the driving forces. A state of equilibrium is reached when the sum of the driving forces equals the restraining forces.

Lewin formulated three fundamental assertions about force fields and change.

Increasing the driving forces results in an increase in the resisting forces; the current equilibrium does not change but is maintained under increased tension.

Reducing resisting forces is preferable because it allows movement towards the desired state, without increasing tension.

Group norms are an important force in resisting and shaping organisational change.

As far as TESCO is concern, its driving force is leading position and rapport in retail industry and availability of huge finances along with structured frame work of outlets. In additions technology advancement and skilled work force is also considerable driving force in TESCO, however, established work patterns, complacency and lower profit margin would be resistance occurring factors. But driving forces at TESCO are stronger as compared to restraining forces.

Stakeholder Analysis and WIFM

In their book Organisational Transitions: Managing Complex Change (1987) Beckhard and Harris describe and illustrate two techniques for analysing relevant sources of energy.

They analyse respectively the ‘sources and potency of forces for change’, and the ‘readiness and capability’ of individuals and groups to enact change.

First, the nature of the change demanded must be specified, using tools and techniques associated with environmental and organisational analysis.

Then all the forces for change, both inside the organisation and external to it, are listed along one axis of a grid.

On the other axis the potency of the forces is indicated, as high, medium or low.

Sources and Potency of Forces (Beckhard & Harris, 1987)

Early on in the change process, organization need to identify which specific groups and individuals will be required to support the change if the change is to be successful.

When they have done so they can determine the readiness and capability of these individuals and groups to enact the roles required of them in the change process.

Capability is determined by whether they have the power, the influence and the authority to allocate resources, and the appropriate information and skills.

Beckhard and Harris (1987, p.63) have developed a Readiness–Capability Assessment Chart which enables the user to list individuals or groups who are critical to the change effort, and to rank them (high, medium, or low) each according to their readiness and capability with respect to change.

The following chart will be used to develop an analysis related to stakeholder’s readiness to develop the change or adopt the new procedure.

Readiness and Capability (Beckhard & Harris, 1987)

Stakeholders

(Key Individuals or groups

Readiness

Capability

Action required to increase the readiness or capability

Need to rate as high, medium or low

Where a change must be implemented from the outside, ie when it has not been defined as necessary by the people involved, then it is unlikely to succeed (yield the full results of which people have ambitions) unless some of those involved are in favour of it.

Several observers (Rogers, 1983) have suggested however that not everyone needs to support a change, and that not everybody needs to support it to the same extent.

Senge in The Fifth Discipline (1990) talks of the difference between

commitment,

enrolment

compliance,

Suggesting that while it is more pleasant (and reassuring) to have considerable commitment, it is not necessary for everyone to be as fully signed-up as this.

There exist a number of positions along a continuum, along which players may position themselves in response to proposed action and change

Conclusion:

After conducting a thorough research it has been finally in the recommended that TESCO should have introduced Oyster Card top up counter at its all retail outlets in UK to acquiesce the maximum market share on the consumer’s product, this would be a unique step in the gain retail industry and satisfy the customer numerous population travels through underground metros, tubes, buses, daily to commute their workplaces, universities, schools, amusement centers etc. While introducing the oyster top up card facility, certain change process should be adopted by TESCO to analyze the readiness of stakeholders in acceptance of the change. However, TECO driving forces are tend to be stronger than its restraining force, so the change could be easily absorb by the employees and other associates. TESCO has a well establish infra-structure that appropriately supports the change. By this strategic move, I am sure that TESCO will not only increase the revenue but also attain the customer loyalty in addition to the competitive edge over the competitors.